Courtesy of Clients from Hell:
Me: Right, I’ll send through your invoice now.
Client: Oh, don’t worry about that - I’ve already sent it. Check your email.
Confused, I check my inbox to find an email with a text document attached charging me £800 - the amount I quoted the client.
Me: I still I think I better send an official invoice to you…
Client: What are you talking about? Why would you possibly want to charge me? I’m the one that has put time and effort into managing this project plus I allowed you to design AND code it all - you should feel privileged!
Client: I expect payment within 30 working days.
*Phone cuts off*
Now, if you had a signed contract with this client from hell, you could avoid a situation like this. Well, maybe not avoid, but you could put yourself in a position to be able to hold this client accountable, or to let the client know of the possible legal repercussions of breaching the contract. Obviously, you wouldn't be signing a contract where the client is charging you for services, instead of the other way around.
But, a situation like this highlights why it's so important for independent contractors and the self-employed to have contracts with their clients, and to insist on them with potential clients. A contract is there so either party can hold the other accountable for their side of the contract. Hopefully, it doesn't have to come to going to small claims court and hiring a lawyer. But, you don't want a client like this client from hell to get away with that behavior because you didn't have a contract set up in the first place.
If you're in a situation where a client is breaching contract because he or she hasn't paid, then Kelly James-Enger has an effective "pay-or-die" letter that applies the necessary pressure to get your client to take action. It may not be an action you like, but it's certainly better than having the client ignore your calls and emails as you try to get things settled. I actually used the letter recently with a client, which prompted him to get back to me after several attempts to get in touch in order to clear up the issue.
The moral of the story is: have a contract. If you don't have a legal background or access to an attorney to put one together, you can easily make one yourself by finding quality templates online and using those as models and examples. It doesn't have to be fancy and full of legal jargon. A contract is essentially meant to put your business agreements in written form. In business, it's best to put it on paper, and not to rely on a he said/she said.